Raedel & Anor v Jezer Construction Group P/L
[2009] QCA 61
•20 March 2009
SUPREME COURT OF QUEENSLAND
CITATION:
Raedel & Anor v Jezer Construction Group P/L [2009] QCA 61
PARTIES:
GREGORY MELVILLE RAEDEL & KATHLEEN TERESA RAEDEL
(plaintiffs/appellants)
v
JEZER CONSTRUCTION GROUP PTY LTD
ACN 054 548 319
(first defendant/respondent)
COMPTON’S VILLAGES LIMITED
ACN 072 933 987
(second defendant/not a party to the appeal)FILE NO/S:
Appeal No 9692 of 2008
DC 1291 of 1999DIVISION:
Court of Appeal
PROCEEDING:
General Civil Appeal
ORIGINATING COURT:
District Court at Brisbane
DELIVERED ON:
20 March 2009
DELIVERED AT:
Brisbane
HEARING DATE:
25 February 2009
JUDGES:
Holmes, Muir and Chesterman JJA
Separate reasons for judgment of each member of the court, each concurring as to the order madeORDER:
Appeal dismissed with costs.
CATCHWORDS:
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – PENALTIES AND LIQUIDATED DAMAGES – GENERAL PRINCIPLES – where appellants took an assignment of the original cause of action against the respondent – where the respondent and the original plaintiff had entered into a sub-contract under which the original plaintiff agreed to supply materials and labour for landscaping – where original plaintiff failed to perform certain contractual obligations by the date for practical completion specified in the sub-contract – where the primary judge found that the respondent had proved its counterclaim for liquidated damages and was also entitled to damages for the cost of undertaking work which the original plaintiff failed to perform – where the appellants submitted that the sub-contract was partly oral, partly written and partly formed by conduct – whether primary judged erred in construing the scope and content of the obligations under the sub-contract
CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – PENALTIES AND LIQUIDATED DAMAGES – GENERAL PRINCIPLES – where primary judge found that the respondent had proved its counterclaim for liquidated damages – where appellants submitted that the parties, by their conduct, had waived compliance with the liquidated damages provisions or, alternatively, had agreed to an extension of time – whether primary judge erred in awarding liquidated damages
Queensland Building Services Authority Regulation 1992 (Qld)
COUNSEL:
L A Stephens, with N Hiscox, for the appellants
J W Peden for the respondentSOLICITORS:
Alexander Law for the appellants
Tucker & Cowen for the respondent
HOLMES JA: I agree with the reasons of Muir JA and with the order his Honour proposes.
MUIR JA: The appellants appeal against orders of a judge of the District Court dismissing their claim and ordering that the appellants pay the respondent's costs on the standard basis. The proceeding was instituted by a plaint in 1999 and finally came to trial in August 2007. In 2002 the appellants delivered a further amended statement of claim ("the statement of claim") in which they claimed against the respondent $77,403 under a sub-contract between Ramaville Pty Ltd and the respondent. Those monies were also claimed on a quantum meruit.
The appellants, who were Ramaville's directors and shareholders, took an assignment of Ramaville's cause of action against the respondent on 14 September 2000. Ramaville went into liquidation on the following day and the appellants replaced Ramaville as plaintiffs.
The allegations in the statement of claim, which was not amended again, were to the following effect:
(a) Ramaville and the respondent entered into a sub-contract in writing dated 7 August 1998 under which Ramaville agreed to supply materials and labour for landscaping at the site of Compton's Village, a retirement village under construction.
(b) Between 17 April 1998 and 17 January 1999 Ramaville performed work and supplied equipment pursuant to the sub-contract or, alternatively, at the direction of the respondent.
(c) The amount due under the sub-contract or, alternatively, as reasonable remuneration for material supplied and work performed was $77,403.
(d) Ramaville assigned its debts to the appellants and the appellants gave notice of the assignment to the respondent.
The original plaintiff, Ramaville, filed a document headed "Plaintiff's Particulars" on 26 May 1999, which purported to be particulars of allegations in the plaint. It does not actually identify the allegations being particularised and commences by alleging, inconsistently with the plaint, and subsequently the statement of claim, that the sub-contract was "partly oral, partly written and partly formed by conduct." There then follows a lengthy narrative which traces the dealings between Ramaville and the respondent from the calling of tenders through quotations submitted by Ramaville, discussions between representatives of Ramaville and the respondent, negotiations between the parties, the submittal of revised quotations by Ramaville, the commencement and carrying out of works to the execution of the sub-contract on 7 August 1998.
Towards the end of this four page document, it appears to be alleged that because of the conduct of the parties the times provided for the execution of the works in Schedule 4 to the sub-contract had no contractual effect. This rambling narrative, posing as particulars of allegations in a plaint, was under the name of the solicitors acting at that time for Ramaville.
Another set of particulars was filed on 22 July 1999. It provided particulars of Ramaville's variation claim of $60,802[1] by identifying the work done and/or materials supplied pursuant to alleged variations.
[1]Elsewhere stated as $60,622.50.
The primary judge found that the appellants had proved $36,488 of their $77,403 claim. He found, however, that the respondent had proved its claim for liquidated damages in the sum of $62,000 and that the respondent was entitled to deduct $30,894 from the sum of $36,488 for the cost to the respondent of doing work which Ramaville failed to do in breach of its obligations under the sub-contract. The result of these findings was that the respondent's counterclaim overtopped the appellants' claim by $56,406 and the appellants' claim was dismissed.
It is now proposed to consider each of the grounds of appeal.
The primary judge erred in finding that the agreed negative variation of $1845 should be deducted from the claim
The appellant has elected not to contest this ground of appeal on the pragmatic basis that, because of its quantum, its outcome was unlikely to have a material bearing on the outcome of the appeal.
The primary judge erred in finding that the "bobcat variations" for Daley Tipping Truck and Machinery Hire were not proved and should be deducted from the claim.The primary judge should have found that the work performed by Daley Tipping did not form part of the sub-contract and should have allowed into evidence the invoices relating to these works and their payment
The primary judge erred in finding that the painting works, concreting works, earthworks, and rubbish removal were works which should have been performed by Sunshine Landscaping supplies, under the contract.His Honour should have allowed evidence at trial, defining the scope of works referred to in the contract as "landscape works".His Honour failed to admit evidence in relation to the quotations and scope of works which defined the meaning of "landscape works".
The issues raised on the pleadings
This ground concerns a component of the appellants' claim for $77,403.38 described in the further particulars filed in July 1999 as "variations for Bobcats $29,735.75."
The final paragraph of the July 1999 particulars provided:
"(a)(i)-(iv)The Supplying of Bobcats, Tippers and Water Trucks to move earth, clean and remove rubbish from the site was performed by the Plaintiff from on or about May 1998 to December 1998 as per the various oral instructions from J Murphy, J Pettersen and Sammy and as partially detailed in the following invoices and as wholly acknowledged by the First Defendant at Variations number 65 – 67 inclusive on the attached variation summary:
Invoice No.2571;
Invoice No.2525;
Invoice No2549; and
Invoice No.2556."
Paragraph 5 of the respondent's further amended defence and counterclaim, which does not bear a date, provides:
"During the course of the subcontract,
the plaintiffRamaville submitted claims for variationswhich totalled the sum of $56,136.50, of which the sum of $43,416.50 were authorised by the first defendant and approved for payment, particulars of which are:relating to a Bobcat hire totalling $38,051.25 of which variations totalling $3,892.50 were authorised and approved, and claimed other monies as variations which were properly within the scope of work required to be done under the subcontract, namely an amount of $29,187.51; and further claimed an amount of $5,001.25 twice."
Paragraph 11 of the appellants' amended reply and answer dated 16 February 2007 contains a denial that Ramaville claimed for variations which were not requested or approved. It alleges that Ramaville acted under instruction from the respondent and its representatives at all times.
The appellants' contentions
The appellants' contentions are to the following effect. Daley Tipping was a business name under which Ramaville carried on business. The work performed by Daley Tipping, the supply of tippers and machinery for the loading and removal of rubbish and excavated materials from site, did not form part of the work under the sub-contract that was between Sunshine Landscaping Supplies, another business name used by Ramaville, and the respondent.
Oral evidence given on behalf of the appellants at trial showed that the claim for $29,753 was for work performed by Daley Tipping at the request of the respondent which was invoiced by Daley Tipping to the respondent. The invoices and dockets by Daley Tipping relating to the monies claimed were available in court and had been disclosed. The appellants were prevented in the trial from tendering the documents by a ruling by the primary judge acting on submissions by counsel for the respondent. Exhibit 1, a variation summary produced by the respondent, shows that the amounts for the Daley Tipping work were agreed by the respondent.
In oral argument counsel for the appellants argued that the Daley Tipping work could be seen to be outside the sub-contract as much of it was performed before the date of the sub-contract. It also emerged in oral argument that a primary complaint of the appellants was that the subject work, which was evidenced, at least for the most part, by invoices rendered by Daley Tipping and signed on behalf of the respondent, was not work within the scope of the sub-contract which was performed by Sunshine Landscaping Supplies. It was argued also that the sub-contract had to be construed by reference to the work the holder of a Landscaping Licence was authorised to perform by a licence issued under the Queensland Building Services Authority Regulation 1992 (Qld). As Ramaville was not permitted under its licence, so it was submitted, to do painting or general concreting works, the sub-contract should be construed so as to exclude work of that nature from its ambit.
The relevant findings of the primary judge
The primary judge's findings relevant to this ground of appeal are as follows. Referring to a number of variations described in Exhibit 1 which had a total value of $9,316.50, his Honour remarked that the female appellant conceded that there was no approval in writing in respect of those items. His Honour concluded, "Hence none of them are proved on the evidence." His Honour then said:
"[171]A similar situation applies to variations relating to bobcats. The plaintiffs did not produce any evidence of their bobcat claim, as it proceeded in trial, and this appeared to have been conceded by Mrs Raedel in evidence.
[172]Mr Schmith gave evidence for the first defendant of the amounts he said were properly claimed and allowed for under the sub contract. He was not challenged about this in cross-examination. The end result is that the plaintiff's claim for $29,753.75 in respect of bobcat variations has not been established on the evidence. There was an issue about "fence checkouts", part of the fencing construction issue. The value of that work ($1,845) was agreed by Mrs Raedel as having been a negative variation to the subcontract price (that is, a deduction)."
These findings are supported by the evidence. In the course of her evidence, the female appellant admitted to not having documentary evidence in respect of some of the subject works, apart from purchase orders A2571 and A2525. Those two purchase orders are referred to in Exhibit 45, a spreadsheet prepared by the respondent in order to analyse the appellants' claims. This document accepted liability for $3,892.50. That sum included payment for the work and materials the subject of these two purchase orders.
Exhibit 1 is of no assistance to the appellants. It was admitted into evidence after explanation by the respondent's counsel that the document had been "… generated in about mid-March 1999 as an attempt to try and sort out … the amounts owing." He explained that there may be sums in the document "allowed against variations for the purposes of the negotiations." The primary judge, in the course of the relevant exchange, remarked that the claim in respect of bobcats was in dispute. Exhibit 1 was said by the primary judge to be admitted into evidence "for a limited purpose and that is to simply identify the matters in dispute and not as evidence of the entire contents of the document." There was no objection to this procedure.
The argument based on the Queensland Building Services Authority Regulation 1992 (Qld) must be rejected. The work Ramaville contracted to perform under the sub-contract is spelt out in the schedule to the sub-contract as follows:
"THE SCHEDULE HEREAFTER REFERRED TO
ITEM A'Brief Descrition (sic) of works to be carried out by the Subcontractor:
All Landscape work as specified by Jeremy Ferrier, the Landscape Architects for Compton Village, Caboolture, as listed below; with the following exemptions:
Clause 4.02; 4.03; 7.01; 7.02; 7.03 and the supply of the pavers.which is detailed in, but not limited to Drawings and Specification sections:
Drawings:
by Jeremy Ferrier's Nos: LP.1/C to LP.6/C inclusive & LD 001, LD 101, LD 103, LD 106, LD 110, LD 306, LD 316, LD 401, LD 403, LD 801 & LD 815
Specification:
By Jeremy Ferrier's Nos: Sections 1 to 14 inclusive.
Other documents: Any applicable 'Greenway Architects' drawings or specificationand to Jezer's Construction Program attached; all for the Contract Sum of:
Two Hundred and Five Thousand Dollars ($ 205,000)
To supply labour only to 'Paving' at the Rate of $20 / M2"
The Jeremy Ferrier specification, the application of which was undisputed, contained 14 sections, most of which provided for a separate type of work such as earthworks, drainage, walls, paving, edging and "fences/screens". Provision was made in Section 8 headed "Fences/Screens" for the painting of timber dividing fences and timber screens. The scheme of the schedule, as can be seen from the above quotation from it, was that Ramaville will perform the work and supply the materials in the specification except for that contained in specified clauses "and the supply of the pavers".
The fact that Ramaville may have lacked a licence which entitled it to do some of the work is irrelevant. Its obligation was to "complete the subcontract work". How it went about performing its obligations was a matter for it. Also, even in the unlikely event that the nature of the licence or licences held by Ramaville could bear on the construction of the sub-contract, it would need to be shown that the respondent knew what licences Ramaville held at the time of contracting. Not surprisingly, there was no evidence of this: the issue was not raised in the pleadings.
The argument which centred around the premise that the work done by Daley Tipping was outside the sub-contract was contrary to the appellants' pleaded case which treated the subject work as work done under the sub-contract. The statement of claim was formulated by reference to "variations for bobcats" of $29,753 and that figure was particularised to a degree in the July 1999 particulars. The particulars included reference to the respondent's variation summary, which dealt with variations to the sub-contract.
Counsel for the appellants sought leave on the appeal to file an affidavit which had exhibited to it invoices or statements rendered to the respondent by Ramaville in the name of Daley Tipping, which were claimed to be in respect of the disputed Daley Tipping work. The appellants' difficulty, however, is not in proving that the work was done, but in proving that it was work outside the sub-contract. Putting aside the fact that the point sought to be agued was not raised on the pleadings, on the face of the evidence, the work done by Daley Tipping prior to the date of the sub-contract was work in respect of the specifications which later became part of the sub-contract. Ramaville, by contracting, agreed to perform such work for the contract price. And it had been understood by the parties from the outset that the respondent would require the execution of a sub-contract covering the work.
Daley Tipping had no legal identity separate from Ramaville and any contractual dealings were between Ramaville and the respondent at all times.
The conduct of the trial
It is desirable at this juncture to say a little about the conduct of the trial and the extent to which the respondent and the primary judge insisted that the matters in issue be confined to the pleadings.
During the opening of the case by the female appellant on the appellants' behalf, counsel for the respondent foreshadowed that the respondent would object to any evidence outside the scope of the pleadings. He said, "… it is not for [the appellants] to seek to run a defence that would have been available to Ramaville had Ramaville decided to run this claim … they are limited to whatever claim it is that Ramaville had at the time." Subsequent discussion revealed that counsel was referring to the particulars of invoices of claims provided by Ramaville when party to the proceeding.
Early in the evidence of the appellants' first witness, the male appellant, counsel for the respondent objected to evidence being adduced which was outside the scope of the pleadings. He submitted that:
"It's not in issue that the agreement was entered into by the parties and executed by the parties. What flows from the case is the question of variations and non-performance with the agreement. There's no issue on the pleadings as to any question of interpretation of the document or any oral variations to it … "
The female appellant argued that as the sub-contractors signed on 7 August 1998 after "a lot of the work was done … it was subject to these written quotations and verbal acceptance of them." Counsel for the respondent then made extensive submissions with reference to the pleadings. Counsel drew attention to paragraph 5 of the statement of claim which he described as "the operative claim for the amount of money owing under the sub-contract" and to paragraph 3 of the amended defence which denied that monies were owing for "… three reasons: the reason of variations to the sub-contracts, that's the first reason; the second reason is contra-charges; and the third reason is breach of the sub-contract." Counsel then referred to paragraph 3 of the amended reply and answer which referred to paragraph 3(a) of the defence. That paragraph provided:
"3.As to the facts alleged in paragraph 3(a) of the defence, the Plaintiff admits that the clauses pleaded are contained in the sub-contract dated 7 August 1999 (sic) (the "sub-contract"), together with other clauses which are relevant to the execution of the contract works.
but says further that by reason of the matters pleaded herein, the First Defendant is estopped from relying on, or has waived its rights to rely on clauses 2©(sic), 2(f), 22(a) and 23(c)."
He drew attention to the fact that an estoppel claim had been deleted from paragraph 3. Counsel referred to paragraph 4 of the amended reply and answer which, also responding to paragraph 3(a) of the defence, provided inter alia that the plaintiff "states that in accordance with clause 1 of the sub-contract, Ramaville completed the sub-contract works described in the schedule to the sub-contract in a workmanlike manner in accordance with all relevant drawings and specifications and in the time nominated by the first defendant in its construction programme." Counsel made reference to paragraph 4 of the reply and answer and noted that it didn't raise any issue about pre-contractual negotiations. The primary judge asked if there was anything "relevant in the particulars that were given earlier about that" and counsel responded that "the particulars really just go to details of the variations under the contract."
The female appellant drew attention to the May 1999 particulars and quoted the introductory assertion that "the agreement between the plaintiff and the first defendant was partly oral, partly written and partly formed by conduct." After further argument, the primary judge intimated that the appellants were bound by the pleaded case which he identified as the claim, defence, counter-claim and reply, if any, and that if the appellants wished to pursue a case outside the pleadings, they would need to obtain leave to amend. His Honour said that he would give the appellants an opportunity to further consider their position and consult a lawyer. That course of action was opposed by counsel for the respondent but the primary judge adjourned the Court at 3:42 pm in order to give the appellants time before court resumed at 9:45 am the next day to obtain legal advice. When the trial resumed the next morning at 9:50 am the primary judge asked the female appellant if she wished to say anything in relation to the matter discussed the previous day. Her response was that she had "taken direction" the previous evening on certain matters and that she wished to proceed with the case.
The primary judge erred in finding that variations to the value of $9,316.50 were not supported, were not in writing and did not have the approval of the respondent.The primary judge should have found that written evidence was produced for a number of these variations, that oral evidence was given in relation to the approval of the respondent and that one of the variations was not in issue.
The primary judge's findings relevant to this ground of appeal are:[2]
"The first defendant conducted the trial on the basis that only some of the items of claim variations and dispute would be challenged. Hence a number of concessions were made about some items which were in minimal amounts. The variations challenged were those listed in Exhibit 1 (Exhibit 2 was a variation of Exhibit 1 but was primarily used as a matter of convenience as a working document during the trial) where on that document there was a variation number, an amount claimed by Ramaville and an amount assessed at "nil" or designated by a dash. The variations appear to be on the face of the evidence numbers 1, 5, 14, 18, 31, 32, 38, 43 and 35. The quantum of those variations is $9,316.50. However, Mr Raedel conceded that in respect of those items they were not approved in writing. Hence none of them are proved on the evidence."
[2]Raedel v Jezer Construction Group Pty Ltd & Anor (Unreported, District Court of Queensland, Durward SC DCJ, 2 September 2009), [170].
The primary judge's finding as to the concession by the male appellant was unchallenged.
Clause 23 of the sub-contract provides:
"23. VARIATIONS
(a)Variations to the Subcontract Works may be directed by Jezer to the Subcontractor by notice in writing to the Subcontractor.
(b)In this clause a "variation" will arise where there is a direction to:
(i)Increase, decrease or omit any part of the work under the Subcontract;
(ii)change the character or quality of any material or work;
(iii)change the levels, lines, position or dimensions of any part of the work under the Subcontract;
(iv)execute any additional work; and/or
(c)The price of any variation shall be added or deducted from the Contract Sum. Should the parties not agree upon a price, Jezer may require the Subcontractor to execute the variation and the matter of price may be referred to arbitration in accordance with Clause Twenty Six (26) hereof or, at Jezer's option, Jezer may have any variation carried out by another party, in which case the Subcontractor will allow free access to the site and the Works to such a party and that party's employees and agents as required. Such action on Jezer's part will in no way limit or restrict the guarantees and or warranties relevant to the Subcontractor's work.
(d)Notwithstanding the provision of Subclause 23(c), Jezer may instruct the Subcontractor to proceed with the work involved in a Variation of addition. The Subcontractor shall then keep and present in such form to the satisfaction of Jezer a proper record of the cost of the work together with supporting evidence.
To the value of the work so determined there shall be added: material cost, a percentage stated in the schedule for Subcontractor's overhead and profit and attendance over the material cost plus the relevant labour cost including labour and or tradesperson per normal hour and or per week basis and Subcontractor's overhead, profit and attendance inclusive.
(e)No claim by the Subcontractor for the cost of executing extra work shall be paid by Jezer unless Jezer has given prior written approval for such work."
The evidence does not establish any disputed variation to the sub-contract directed by the respondent within the scope of clause 23. Ramaville, by operation of clause 23, could claim and recover in respect of a variation only where there was a document produced by the respondent identifiable as a variation notice or direction. Variation 1 is a claim for additional costs of $2,460 resulting from changes to a retaining wall. Ramaville submitted a written quotation dated 8 July 1998 for the work. In a "subcontractor payment form" dated 5 October 1998 produced by the respondent and signed on its behalf, the item "add bolts to retaining wall $2,460" appears under the heading "New Variations". The male plaintiff gave evidence that established that the entry on the payment form was in respect of the work referred to in the quotation and that the work was done.
In those circumstances I have difficulty in seeing how the respondent could rely on clause 23(e). It entitles the respondent to refuse payment for extra work. It does not give the respondent authority to deduct from subsequent progress claims the amount of claims for work done which has been considered, accepted and paid.
There is also some evidence which supports the claim for Variation 5 in the sum of $120 but the other variations under consideration lack necessary documentary support. It is unnecessary however to consider them, as even if the primary judge should have allowed them, the amount of the counter-claim is far in excess of the appellants' sustainable claim.
The primary judge erred in finding that liquidated damages applied from 8 September 1998 to 9 November 1998 and in not finding that:the parties by their conduct waived compliance with the liquidated damages provisions; alternatively, extensions of time were agreed from time to time between Ramaville and the respondent; in the further alternative, the respondent and its sub-contractors prevented Ramaville from completing the contract works on time.
The appellants' submissions
Exhibits 11 and 28 are notices in writing by the respondent extending time for completion of the subcontract works. By operation of the extension given by Exhibit 28, the due date for completion was 7 October 1998, not 8 September 1998 as stipulated in the schedule to the sub-contract.
The works could not have been done in accordance with the programme attached to the Schedule, as it allowed only for completion of 45 units. The Schedule time limits were impossible to meet. The decision on the style of garden edging for most of the project was not made until 2 October 1998. Exhibits 19 and 23 show that. The respondent, by its conduct, prevented Ramaville from completing the works by the dates in the Schedule.
The Pleadings
In paragraph 3(b)(ii) of its further amended defence and counterclaim, the respondent pleaded that Ramaville failed to perform "the contract works by the date for practical completion pursuant to item B.2 of the Schedule." A schedule in paragraph 3(b)(ii) showed completion dates under the sub-contract for each of stages 1, 2 and 3, actual dates of practical completion, number of days delay and liquidated damages. The total amount of liquidated damages claimed was $219,000. After the close of evidence, the respondent modified its claim to $62,000 based on the number of days difference between the contractual date for practical completion and 9 November 1998, the actual date of practical completion of stage 3, the last of the three stages.
In their amended reply,[3] the appellants denied that there were liquidated damages owing. Paragraphs 6 and 7 of the amended reply provided:
"(I)it was represented to
thePlaintiffRamaville that the sole purpose for signing the sub-contract was to make available monies toitRamaville for work already performed. Ramaville was advised that payment could not legally be made until the contract was signed. It was Ramaville's understanding that the contract was just a formality.(ii)The work could not be performed in accordance with the
scheduleprogram dated 20/7/98,[4] because as at the date ofthe PlaintiffRamaville signing the sub-contract (7/8/98), practical completion of seven units in stage 1 of the works could never have been achieved by thescheduleprogram date of 12/8/98; and(iii)at all times during the performance of the contract
itRamaville acted in accordance with site directions and instructions provided by the First Defendant within a reasonable time, and completed all works in accordance with the current Jezer Schedule.7.As to the facts alleged in paragraph 3(b)(iii) of the defence, the Plaintiff admits that
itRamaville failed to give the First Defendant written notice of delay first occurring within the time allowed pursuant to clause 2(f) of the subcontract, but denies that it was required to do so becausethe PlaintiffRamaville believed that reliance on the dates forpracticalcompletion contained in thedispute schedulecompletion program dated 20/7/98, and signed 7/8/98, referred to in the contract schedule in relation to 'date for completion', was never intended for the reasons referred to in paragraphs 4 and 6 above and because the actions of the First Defendant leaditRamaville to believe that strict compliance with this clause was not required."
[3]At paragraph 6.
[4]The construction programme referred to in the schedule to the sub-contract and forming part of the sub-contract.
The primary judge's findings in relation to the respondent's liquidated damages claim are as follows:[5]
[5]Raedel v Jezer Construction Group Pty Ltd & Anor (Unreported, District Court of Queensland , Durward SC DCJ, 2 September 2009), [194] – [200].
"[194]The subcontract provided in clauses 1 and 2(a) for the work to be carried out in accordance with the 'current attached Jezer Construction Program.' As I have said the work was required to be completed in three stages.
[195]The dates of practical completion of stages 1 and 2, was 5 November 1998; and of stage 3, 9 November 1998. Those dates are established by the Notices Exhibits 46 and 47 respectively, neither of which was credibly challenged in the course of evidence by the plaintiffs.
[196]Exhibit 6 is a diagrammatic representation of the three stages of the construction program. Each stage is hatched in a different colour on the exhibit and it is incontrovertible that there are 180 units comprised in 45 pods of four units each. There were 16 pods in stage 1, 11 pods in stage 2 and 18 pods in stage 3. The plaintiffs in evidence asserted that they had interpreted the Jezer works program and the word 'unit' to refer to the pods and that therefore Exhibit 6 did not refer to the whole of the project. However, Mr Raedel conceded in cross-examination that the construction program did comprise 180 units in clusters of 45 pods.
[197]Save for that unsustainable assertion, there was no relevant admissible evidence led by the plaintiffs that called into question the operation of the liquidated damages clause.
[198]The sub-contract provided for a sum of liquidated damages of $1,000 per day. No request for an extension of time under the sub-contract was made by the plaintiffs. Mr Raedel conceded as much in cross-examination. He said that he had been doing landscaping 'for a long time for a lot of large companies' but had 'never had liquidated damages before.' He also conceded that Mr Choi required him to give an undertaking to complete the works and he did so, in writing (Exhibit 28).
[199]In its submission the first defendant[6] has contended clause 2(c) and the schedule of daily liquidated damages sum on the basis that it would apply from the final date for the last or latest date of completion for all the stages, (8 September 1998) to the latest date of practical completion (9 November 1998). The difference between the two dates is 62 days and hence the claim for liquidated damages is in the sum of $62,000. This concession was apparently made to simplify the calculation of damages.
[200]As I have said and despite the state of the evidence, the plaintiffs in their written Submission maintained that the works were performed in accordance with Ramaville's contractual obligations. Reference is made to the activities of other sub contractors, to the weather and at least inferentially to the plaintiff's belief about of the terms of the sub contract. In the written Submission the unsustainable assertion with respect to Exhibit 6 is resurrected. It seems to me that the plaintiffs really have no evidence to contradict or vary the claim for liquidated damages. The submission asserts that the company proceeded with the contract works in accordance with the 'current Jezer construction program'; in accordance with the relevant clauses of the contract and that there were no liquidated damages therefore owing. That Submission is wholly unsupported by any evidence, let alone any admissible evidence and is unsustainable."
[6]References to Jezer or the first defendant are to the respondent.
Consideration
The General Conditions of Sub-contract relevantly provide:
"1. CONTRACT SUM
The Subcontractor will complete the Subcontract Works described in the Schedule (the Works) in a workmanlike manner in accordance with all relevant drawings and specification and in the time nominated in Jezer's Construction Program for the consideration set forth in the Schedule (hereinafter called the "Contract Sum") and with the acknowledgment that the intent and the scope of works have been adequately conveyed within the Contract documents.
…
2. COMMENCEMENT AND COMPLETION
(a)The Subcontractor shall not later than the Date for Commencement stated in the Schedule, regularly and diligently proceed with the Subcontract Works as per the current Jezer Construction Program.
…
(c)If the Subcontractor fails to complete the Works by the Date for Completion specified in the Schedule or within any extended time approved in writing by Jezer, the Subcontractor shall pay or allow by way of liquidated damages the sum stated in the Schedule for each week or part of a week during which the Subcontract Works shall remain incomplete.
…
(f)If the Subcontractor is delayed in completing the Subcontract Works by any cause of whatsoever nature, the Subcontractor must give Jezer written notice within seven (7) days of the delay first occurring.
The Subcontractor may only claim an extension of time to the Date of Completion if the delay is caused by an act or omission by Jezer, it's employees, agents, consultants or the Proprietor.
If the Subcontractor wants to claim an extension of time to the Date for Completion, the Subcontractor must:
(i)give Jezer the notice required by the first paragraph of this sub-clause; and
(ii)make its claim by further notice in writing to Jezer, which notice shall also set out the facts in detail on which the claim is based and the extension of time claimed, within seven (7) days of the event which gave rise to the delay or of the consequences of that event ceasing to occur.
Jezer shall grant a reasonable extension of time to the Date for Completion, where the Subcontractor has made a claim as required by this clause and the claim has been proved valid.
Notwithstanding anything contained in this Subcontract, Jezer may, at its discretion, extend time for completion of the Subcontract Works for any reason (including for any delays caused by any act or omission of Jezer, its employees, agents, consultants or the Proprietor) and whether or not the Subcontractor has complied with any obligation to give notice as required by this clause."
Liquidated damages are stated in the Schedule to be $1,000 per day. The date for commencement specified in the Schedule was June 1998 and the date for completion was stated "as per attached program dated 20.7.98". That programme contained a series of completion dates for specified units within Stages 1, 2 and 3. The last date specified was 8 September 1998.
I do not understand the written submission that "the works could not have been done in accordance with the programme attached to the Schedule, as it allowed only for completion of 45 units". No oral submissions were advanced in that regard. The primary judge's unchallenged finding was that there were 180 units in the complex divided into "pods" or groupings of four. Stages 1, 2 and 3 had 16, 11 and 18 pods respectively. The unit numbers listed in the construction programme may thus be seen to be references to pods rather than individual units. But even if this wasn't the case, the programme set dates for completion in respect of individual units which had to be met. The final completion date of 8 September 1998 still applied. Also, this point was not within the scope of the pleadings.
Even if it was the case that the finishing dates in the construction programme were impossible to meet, Ramaville committed itself to meeting those dates by entering into the sub-contract. The construction programme is dated 20 July 1998 and calls for the finalisation of landscaping works in respect of pods on various dates between 6 August and 9 September 1998. The sub-contract was dated 7 August 1998. However, Ramaville commenced work on 15 June 1998, having been provided with the "full specification of the exact works" no later than October 1997.
Counsel for the appellants placed reliance on Exhibits 19 and 23. The former, dated 24 September 1998, is a memorandum by the project architects to the respondent and others. It does not appear to do more than offer faint support for the view that the garden edging for Stages 2 and 3 may not have been decided upon until 2 October 1998 when the respondent issued Exhibit 23, a site instruction concerning the garden edging. It purported to be a "variation request" and a "site instruction report" and specified:
"1.Garden edging for Stage II & III is to be concrete as in original Specs
2.Garden edging, to the corner gardens at Bldg 16 & 19 is to be changed from Timber to concrete
3.See Fax from Greenway 23-9-98 – realigne (sic) Garden as necessary"
On the face of it, this document suggests that decision was not made until 2 October 1998 as to the type of garden edging to be used in Stages 2 and 3. Other documents and oral evidence given by the male appellant support that conclusion. The female appellant cross-examined Mr Schmith, an architect who was the respondent's construction manager, in relation to these two documents. But the questioning was directed to the identification of the types of borders laid and comparative cost. It was not suggested that the documents or a late choice of garden edging caused, contributed to, or excused delay. Mr Choi, a director of the respondent who gave evidence, was not questioned on the documents and it was not suggested to him that garden edging had anything to do with delay. Again the issue was not raised on the pleadings.
Exhibit 11 is a memorandum from the respondent addressed to Sunshine Landscape. It is signed by Mr Choi and states:
"As discussed yesterday you must finish all the paving works and landscaping works by this Friday the 6th of Nov 98.
This includes all timber fences … & cleaning.
We should jointly do defects inspections on Monday morning the 9 Nov 98. Thanks."
Exhibit 28 is a blank sheet of paper which Mr Choi dated 7 October 1998 and on which he wrote:
"This is an undertaking by Sunshine Landscaping to perform their contractual obligations in accordance with their contract.
Stage 1 Finish all outstanding works by Friday 9 Oct 98
Stage 2Finish all paving and landscaping works including clean up by Saturday 10 Oct 98
Stage 3Excavation and garden beds by 13 Oct 98
Paving by 17 Oct 98
Landscaping by 19 Oct 98
Cleanup by 20 Oct 98
If the above schedule is not likely to be met, Jezer is authorised to
bring in additional resources at Sunshine's expense.
DATE – 7 Oct 98"
In my view neither of Exhibits 11 or 28 constitute extensions of time approval in writing by the respondent for the purposes of clause 2(c). The character of the documents needs to be determined in light of their contractual background and the circumstances in which they were prepared and utilised. Clause 2(f) of the sub-contract provided a mechanism by which Ramaville could claim extensions of time by written notice to the respondent where delay was "caused by an act or omission of the respondent, its employees, agents, consultants or the proprietor". Any such claim was required to be supported by a notice which "set out the facts in detail on which the claim is based." Under clause 2(f) the respondent could, if it wished, grant an extension of time notwithstanding non-compliance by Ramaville with the requirements of the sub-clause. Counsel for the appellants placed reliance on this provision.
Representatives of the respondent and, in particular, Mr Choi, had been complaining to the male appellant for some time prior to 7 October 1998 of Ramaville's failure to perform its contractual obligations on time. The respondent's representatives were of the opinion that the problem lay, for at least to a large extent, in the lack of manpower provided by Ramaville. On 4 August 1998 the respondent issued a site instruction to Ramaville which asserted:
"You are behind schedule on fencing … if you do not man the site properly to bring us up to schedule … (unintelligible) will here ... (unintelligible) charge back to you."
In a site instruction issued to Ramaville on 12 August 1998 it was stated:
"As per our conversations you have promised to provide additional manpower to meet our completion date. As you have not done this Jezer Construction will provide additional men and charge this back to your contract until you do so on your own …"
On 29 September 1998, another site instruction by the respondent to Ramaville instructed:
"Finish all garden beds edging and trim off … (stage 1)
Trees not planted shall be planted asap (stage 1)
Level of mulch not consistent. Some mounted high and some level (check specification and rectify)."
Mr Choi gave evidence that at the time Exhibit 28 was produced he was "getting really frustrated about non-complying with the finishing date of the contract …" He continued, "Greg undertook to finish the job on time, numerous time(s), but then again he couldn't finish because he hasn't got enough manpower on site … I basically asked Greg to put in writing when he think that he can definitely finish those work and as the outcome of that discussion, this is – this is the record of that discussion." Mr Choi swore that at the time Exhibit 11 was produced he was stressed and at the end of his patience. He said that there had been no request for any extension of time.
Earlier in his evidence-in-chief Mr Choi swore that in the course of the works he had had numerous discussions with the male appellant "on lack of manpower on sites" and that there had been "substantial delay not only in Stage 1 but Stage 2 and 3 as well." Asked if he had any discussions with the appellants at the time of the site instruction given on 29 September 1998 he said, "Not in a contractual sense. I'm simply asking them to give me a finishing date so that I can tell my principal that Stage 2 or 3 can be finished, keep asking them for that date." The male appellant conceded in cross-examination that in that meeting Mr Choi had said that he was "unhappy with the progress and that [he] hadn't completed the works on time."
Viewed against this background, Exhibit 28 is plainly to be regarded as of the nature of a demand, albeit polite, that the work be finished by 20 October 1998 and not as a document which has a contractual role.
Exhibit 28 is not happily worded from the respondent's perspective in that it takes the form of an undertaking by Ramaville to perform its "contractual obligations in accordance with the (their) contract." Those words make it possible to construe the stated finishing dates for Stages 1, 2 and 3 as ones accepted as being in accordance with the contract. However, I do not consider that this is how the document should be regarded. It was produced in an attempt by Mr Choi to ensure, by means of an undertaking by the male appellant, that the works for Stages 1, 2 and 3 were finished by particular dates. As an incentive for such performance he imposed the penalty, which Mr Raedel accepted, that in the event of default, the respondent could have others do the work at Ramaville's expense.
Having regard to the circumstances in which the document was produced by Mr Choi, it is unlikely that the parties considered it as having any contractual force except in as much as it permitted the respondent, in the event of non-compliance by Ramaville, to hire labour and equipment at Ramaville's expense. It is also unlikely that a reasonable person, having the knowledge of the parties, would have concluded that the document manifested an intention to grant Ramaville an extension of time. It is of some significance that the document was not on the respondent's letterhead or on one of the forms used by it to give instructions or to request or notify variations.
Conclusion
The challenge to the primary judge's findings on the counter-claim was thus unsuccessful. As the quantum of the counter-claim substantially exceeds that of the claims which the appellants have made out, the appellants, as at first instance, are not entitled to any judgment in their favour. Consequently, I would order that the appeal be dismissed with costs.
CHESTERMAN JA: I agree that the appeal should be dismissed for the reasons given by Muir JA.
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